Authors: Jessica Menton, Elena Popina and Matt Turner
Article: Original article
Publication date: Sunday, December 11, 2022
The S&P index has experienced the largest annual loss since 2008.
This week’s consumer price index (CPI) reading is highly important, as signs of lower inflation might support the stock at the end of the year, thereby tempering expectations of further rate hikes.
According to Blomberg data, the S&P 500 index has moved on average about 3% in either direction on the day of the CPI release over the past six months. It’s the highest level since 2009. This year, the S&P 500 index has fallen on 7 out of 11 CPI reporting days.
A half-point increase at the Fed’s meeting on December 14 would leave the rate in the 4.25–4.5% range. Meanwhile, the CPI report on Tuesday is expected to show that it declined from 7.7% to 7.3% year-on-year in November.
Surely, global investment managers hope that 2022 will end on a high note after the S&P 500’s increase for two consecutive months (October, November) for the first time in more than a year. However, betting on the upcoming months is especially difficult, as the S&P 500 experiences its first year of decline since 2018.
Meanwhile, demand for hedging single-stock losses led to the growth of the Cboe put-to-call ratio to 1.5 on Wednesday, the highest level since 2001, which exceeded this year’s average more than twice.
Forecast: the S&P 500 continues to grow by the end of the year.